BioAtla, Inc. (NASDAQ:BCAB) Q1 2022 Earnings Conference Call May 4, 2022 4:30 PM ET Company Participants Bruce Mackle - LifeSci Advisors Jay Short - Chairman, CEO and Co-Founder Scott Smith - President Philippe Martin - Chief of Clinical Development and Operations Sheri Lydick - Senior Vice President, Commercial Strategy Richard Waldron - Chief Financial Officer Conference Call Participants Anupam Rama - JPMorgan Tiago Fauth - Credit Suisse Kelly Shi - Jefferies Kaveri Pohlman - BTIG Tony Butler - ROTH Capi ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) BioAtla is a clinical-stage biopharmaceutical company developing Conditionally Active Biologics (CABs) for solid tumors, with lead ADC candidates BA3011 and BA3021 in Phase 2 trials and BA3071 in Phase 1 [Our Pipeline](index=6&type=section&id=Our%20Pipeline) The company's pipeline focuses on Conditionally Active Biologics (CABs) for solid tumors, featuring three main clinical-stage candidates - The company's pipeline is focused on developing Conditionally Active Biologics (CABs) for solid tumors, with **three main clinical-stage candidates**[30](index=30&type=chunk) - Mecbotamab vedotin (BA3011) is a CAB ADC targeting AXL, in potentially registration-enabling Phase 2 trials for sarcoma and NSCLC, and has received **Orphan Drug Designation** for soft tissue sarcoma[26](index=26&type=chunk)[31](index=31&type=chunk)[34](index=34&type=chunk) - Ozuriftamab vedotin (BA3021) is a CAB ADC targeting ROR2, in Phase 2 trials for melanoma, NSCLC, and SCCHN, particularly for patients who have failed PD-1 blockade[26](index=26&type=chunk)[35](index=35&type=chunk)[37](index=37&type=chunk) - BA3071 is a CAB anti-CTLA-4 antibody designed to offer the efficacy of ipilimumab with lower toxicity, having initiated a Phase 1/2 dose-escalation trial[26](index=26&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) - The company is advancing multiple preclinical assets, including CAB bispecific antibodies and a next-generation CAB ADC, with plans to file **one IND in 2022** and up to **three more in 2023**[44](index=44&type=chunk) [Our Technology](index=9&type=section&id=Our%20Technology) The company's proprietary Conditionally Active Biologics (CAB) technology aims to overcome limitations of traditional antibody therapies by selectively activating in the acidic tumor microenvironment - The company's proprietary Conditionally Active Biologics (CAB) technology is designed to overcome the limitations of traditional antibody therapies, such as on-target, off-tumor toxicity[25](index=25&type=chunk)[27](index=27&type=chunk) - CAB technology leverages the acidic tumor microenvironment (pH < 6.8) caused by the Warburg Effect, engineering antibodies to bind selectively under these acidic conditions but remain inactive at normal physiological pH of 7.4, thereby sparing healthy tissue[57](index=57&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) - This pH-dependent binding is designed to provide several advantages: a **wider therapeutic window**, **reduced systemic toxicity**, **increased drug exposure to tumors**, and improved pharmacokinetics by minimizing target-mediated drug disposition (TMDD)[66](index=66&type=chunk)[68](index=68&type=chunk) [Clinical Trials](index=13&type=section&id=Clinical%20Trials) Clinical trials for mecbotamab vedotin (BA3011) and ozuriftamab vedotin (BA3021) have shown promising antitumor activity and tolerability, with both candidates advancing into potentially registration-enabling Phase 2 studies - Mecbotamab vedotin (BA3011) Phase 1 trial showed confirmed partial responses in sarcoma and NSCLC patients, with antitumor activity correlating with **high AXL tumor membrane expression (TmPS ≥70%)**, and the therapy was generally well-tolerated[69](index=69&type=chunk)[73](index=73&type=chunk)[77](index=77&type=chunk) - Ozuriftamab vedotin (BA3021) Phase 1 trial demonstrated a **complete response in a metastatic melanoma patient** and partial responses in NSCLC and head and neck cancer patients, with antitumor activity associated with high ROR2 tumor membrane expression[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - BA3071, a CAB anti-CTLA-4 antibody, showed similar antitumor efficacy to an ipilimumab-analog in preclinical models but with significantly fewer gastrointestinal toxicities in non-human primates, suggesting a **better safety profile**, and a Phase 1 trial was initiated in 2021[133](index=133&type=chunk)[139](index=139&type=chunk)[143](index=143&type=chunk) - The company is conducting potentially registration-enabling Phase 2 trials for both mecbotamab vedotin (in sarcoma and NSCLC) and ozuriftamab vedotin (in melanoma and NSCLC)[99](index=99&type=chunk)[126](index=126&type=chunk) [Collaborations](index=29&type=section&id=Collaborations) BioAtla has strategically engaged in various collaboration and licensing agreements to advance its pipeline and technology, including regaining global rights for BA3071 and licensing CAB antibodies for specific therapeutic areas - In November 2021, the company terminated its co-development and collaboration agreement with BeiGene for BA3071, regaining global development and commercialization rights in exchange for mid-single digit royalties on sales and a share of upfront/milestone payments from sublicenses to BeiGene[159](index=159&type=chunk) - The company has exclusive license agreements with Inversagen, LLC for diseases associated with aging (outside of cancer), with Himalaya Therapeutics SEZC for certain CAB antibodies in Greater China, and with BioAtla Holdings, LLC for CAB antibodies in the field of Adoptive Cell Therapy (CAR-T)[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - An amended and restated exclusive license agreement with EXUMA Biotech Corp grants EXUMA rights to develop four CAB ACT (CAR-T) preparations for cancer, with BioAtla receiving **mid-single-digit royalties** on net sales[165](index=165&type=chunk)[166](index=166&type=chunk) [Intellectual Property](index=31&type=section&id=Intellectual%20Property) The company maintains a robust intellectual property portfolio, with a focus on protecting its platform technologies and compositions of matter, ensuring patent coverage for its lead product candidates extending into the late 2030s Patent Portfolio Status (as of Dec 31, 2021) | Category | Count | | :--- | :--- | | **Total Patents & Applications** | **584** | | Issued Patents | 319 | | Allowed Applications | 8 | | Pending Applications | 257 | - The company's IP strategy focuses on protecting its platform technologies and compositions of matter, aiming to maximize patent term by timely filing applications, often using the PCT system for international coverage[171](index=171&type=chunk)[173](index=173&type=chunk) - Patents covering mecbotamab vedotin, if issued from the current application, would not expire before **2037**, while those covering ozuriftamab vedotin would not expire before **2037**, and BA3071 patents would not expire before **2039**[179](index=179&type=chunk)[180](index=180&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including a history of losses and the need for substantial additional capital, with success heavily dependent on its novel CAB technology platform and the uncertain clinical development and regulatory approval of its product candidates - The company has a history of significant losses (**$95.4 million in 2021**) and expects to continue incurring them for the foreseeable future, requiring substantial additional capital to fund operations[279](index=279&type=chunk)[283](index=283&type=chunk)[285](index=285&type=chunk) - Success is heavily dependent on the proprietary CAB technology platform, and any failures or safety issues with this novel technology could negatively impact the entire product pipeline[279](index=279&type=chunk)[295](index=295&type=chunk) - Clinical development is subject to high risk, as early-stage results may not predict late-stage success, and there is no guarantee that the FDA will find the ongoing Phase 2 trials sufficient for registration[279](index=279&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - The company faces risks related to its reliance on third parties for manufacturing, conducting clinical trials, and developing companion diagnostics, which could lead to delays and impair commercialization[430](index=430&type=chunk)[434](index=434&type=chunk)[334](index=334&type=chunk) - A portion of research and development occurs in China, exposing the company to risks from Chinese legal and political uncertainties, which could adversely affect operations[279](index=279&type=chunk)[411](index=411&type=chunk) [Properties](index=84&type=section&id=Item%202.%20Properties) The company leases approximately 43,377 square feet of office and laboratory space for its headquarters in San Diego, California, under a lease that expires on February 28, 2025 - The company's headquarters are located at 11085 Torreyana Road, San Diego, California, where it leases **43,377 square feet** of office and lab space[517](index=517&type=chunk) - The current lease agreement terminates on **February 28, 2025**[517](index=517&type=chunk) [Legal Proceedings](index=84&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, BioAtla is not a party to any legal proceedings that are expected to have a material adverse effect on its business, operating results, or financial condition - The company is not currently a party to any material legal proceedings[518](index=518&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=85&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BioAtla's common stock began trading on the Nasdaq Global Market on December 16, 2020, under the symbol "BCAB", with the company having never paid cash dividends and no intention to do so in the foreseeable future, retaining earnings to fund growth - The company's common stock trades on the Nasdaq Global Market under the ticker symbol "**BCAB**" since **December 16, 2020**[521](index=521&type=chunk) - The company has never declared or paid cash dividends and intends to retain all future earnings to support operations and growth[523](index=523&type=chunk) - As of **February 25, 2022**, there were **16 stockholders of record** for common stock and **2 for Class B common stock**[522](index=522&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=87&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal year 2021, BioAtla's net loss increased to $95.4 million from $35.9 million in 2020, driven by a significant rise in R&D and G&A expenses, with $245.0 million in cash and cash equivalents expected to fund operations into the first half of 2024 [Results of Operations](index=90&type=section&id=Results%20of%20Operations) In 2021, the company experienced a significant increase in net loss, primarily due to higher research and development expenses for clinical programs and increased general and administrative costs associated with operating as a public company Comparison of Operations for Years Ended December 31 | Financial Metric | 2021 (in thousands) | 2020 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Collaboration and other revenue | $250 | $429 | $(179) | | Research and development expense | $58,274 | $19,933 | $38,341 | | General and administrative expense | $38,416 | $10,595 | $27,821 | | **Loss from operations** | **$(96,440)** | **$(30,099)** | **$(66,341)** | | **Consolidated net loss** | **$(95,402)** | **$(35,853)** | **$(59,549)** | - Research and development expenses increased by **$38.3 million** in 2021 compared to 2020, primarily due to higher external costs for manufacturing and clinical development of BA3011 and BA3021, increased preclinical development for other pipeline programs, and higher stock-based compensation[561](index=561&type=chunk) - General and administrative expenses increased by **$27.8 million** in 2021, mainly driven by an **$18.2 million increase in stock-based compensation**, higher insurance costs, increased personnel expenses, and higher professional fees associated with being a public company[562](index=562&type=chunk) [Liquidity and Capital Resources](index=91&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2021, the company held $245.0 million in cash and cash equivalents, which is projected to fund operations into the first half of 2024 - As of **December 31, 2021**, the company had cash and cash equivalents of **$245.0 million**[565](index=565&type=chunk) - Based on the current operating plan, existing cash and cash equivalents are expected to be sufficient to fund operations into the **first half of 2024**[569](index=569&type=chunk) Summary of Cash Flows for Years Ended December 31 | Cash Flow Activity | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(62,214) | $(36,334) | | Net cash used in investing activities | $(924) | $(590) | | Net cash provided by financing activities | $69,512 | $271,825 | - In July 2021, the company's **$0.7 million Paycheck Protection Program (PPP) loan** was fully forgiven by the SBA[567](index=567&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=96&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to minimal market risk, with interest rate risk on its cash and cash equivalents not considered significant and foreign currency exchange risk not material, as contracts are primarily denominated in U.S. dollars - The company's primary market risk exposure is interest rate risk on its cash and cash equivalents (**$245.0 million as of Dec 31, 2021**), but historical fluctuations have not been significant[597](index=597&type=chunk) - Foreign currency transaction gains and losses have not been material to the financial statements, and the company has not engaged in foreign currency hedging[598](index=598&type=chunk) [Financial Statements and Supplementary Data](index=97&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements for the year ended December 31, 2021, report a net loss of $95.4 million, with total assets of $254.4 million, primarily cash and cash equivalents, and total liabilities of $43.6 million, all audited with an unqualified opinion by Ernst & Young LLP Consolidated Balance Sheet Data (as of December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $244,979 | $238,605 | | **Total assets** | **$254,422** | **$244,937** | | Total current liabilities | $19,813 | $32,261 | | **Total liabilities** | **$43,601** | **$34,963** | | **Total stockholders' equity** | **$210,821** | **$209,974** | Consolidated Statement of Operations Data (for the year ended December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Collaboration and other revenue | $250 | $429 | | Research and development expense | $58,274 | $19,933 | | General and administrative expense | $38,416 | $10,595 | | **Loss from operations** | **$(96,440)** | **$(30,099)** | | **Consolidated net loss** | **$(95,402)** | **$(35,853)** | | Net loss per common share | $(2.76) | $(3.19) | Consolidated Statement of Cash Flows Data (for the year ended December 31) | Account | 2021 (in thousands) | 2020 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(62,214) | $(36,334) | | Net cash used in investing activities | $(924) | $(590) | | Net cash provided by financing activities | $69,512 | $271,825 | [Controls and Procedures](index=126&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2021, with no material changes during the fourth quarter - As of **December 31, 2021**, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[798](index=798&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of **December 31, 2021**[799](index=799&type=chunk) - No material changes were made to the company's internal control over financial reporting during the **fourth quarter of fiscal 2021**[800](index=800&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=129&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[809](index=809&type=chunk) [Executive Compensation](index=129&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[811](index=811&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=129&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners, management, and related stockholder matters is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[812](index=812&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=129&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[813](index=813&type=chunk) [Principal Accountant Fees and Services](index=129&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for its 2022 Annual Meeting of Stockholders - The information required for this item will be included in the company's Proxy Statement for the **2022 Annual Meeting of Stockholders** and is incorporated by reference[814](index=814&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=130&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Annual Report on Form 10-K, with financial statements included under Item 8 and all financial statement schedules omitted as not applicable - The financial statements are located under **Item 8** of the report[816](index=816&type=chunk) - All financial statement schedules have been omitted because they are not applicable or the required information is already included in the financial statements or notes[816](index=816&type=chunk)

```markdown [PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) BioAtla, Inc.'s unaudited condensed consolidated financial statements for Q3 2021 and FY2020, including balance sheets, operations, equity, cash flows, and accounting notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | September 30, 2021 (unaudited) | December 31, 2020 | | :--------------------------------- | :----------------------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | $269,925 | $238,605 | | Total current assets | $273,517 | $240,681 | | Total assets | $277,579 | $244,937 | | **Liabilities** | | | | Accounts payable and accrued expenses | $24,939 | $12,068 | | Current portion of deferred revenue | $19,806 | $19,806 | | Total current liabilities | $45,227 | $32,261 | | Total liabilities | $46,926 | $34,963 | | **Stockholders' Equity** | | | | Additional paid-in capital | $393,578 | $300,888 | | Accumulated deficit | $(162,929) | $(90,917) | | Total stockholders' equity | $230,653 | $209,974 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Collaboration and other revenue | $— | $150 | $250 | $429 | | Research and development expense | $16,553 | $4,864 | $41,826 | $9,448 | | General and administrative expense | $7,142 | $3,301 | $31,376 | $4,625 | | Total operating expenses | $23,695 | $8,165 | $73,202 | $14,073 | | Loss from operations | $(23,695) | $(8,015) | $(72,952) | $(13,644) | | Total other income (expense) | $765 | $(3,617) | $940 | $(5,814) | | Consolidated net loss and comprehensive loss | $(22,930) | $(11,632) | $(72,012) | $(19,458) | | Net loss per common share, basic and diluted | $(0.68) | $(0.13) | $(2.13) | $(0.13) | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity increased from **$209,974 thousand** at **December 31, 2020**, to **$230,653 thousand** at **September 30, 2021**, primarily driven by additional paid-in capital from stock issuances and stock-based compensation, partially offset by net losses[13](index=13&type=chunk) Key Changes in Stockholders' Equity (Nine Months Ended September 30, 2021, in thousands) | Item | Amount | | :------------------------------------------ | :------- | | Balance at December 31, 2020 | $209,974 | | Stock-based compensation expense | $21,307 | | Issuance of common stock, net of issuance costs | $71,053 | | Net loss | $(72,012)| | Balance at September 30, 2021 | $230,653 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :------------------------- | :---------- | :---------- | | Operating activities | $(41,265) | $(22,328) | | Investing activities | $(835) | $(195) | | Financing activities | $73,420 | $75,576 | | Net increase in cash and cash equivalents | $31,320 | $53,053 | | Cash and cash equivalents, end of period | $269,925 | $56,757 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Organization and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) - BioAtla, Inc. converted from BioAtla, LLC in July 2020 as part of a Corporate Reorganization, spinning off Himalaya Therapeutics SEZC and completing a Series D financing; post-reorganization, BioAtla, Inc. is a single legal entity[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - The Company has incurred cumulative operating losses and negative cash flows, with an accumulated deficit of **$162.9 million** as of September 30, 2021; management believes current cash and cash equivalents are sufficient to fund operations for at least one year[20](index=20&type=chunk)[22](index=22&type=chunk) - The Company expects to lose its Emerging Growth Company (EGC) status by **December 31, 2021**, making new accounting standards effective for its fiscal year beginning **January 1, 2021**[32](index=32&type=chunk)[33](index=33&type=chunk) [2. Balance Sheet Details](index=10&type=section&id=2.%20Balance%20Sheet%20Details) Prepaid Expenses and Other Current Assets (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :---------------------------------- | :----------------- | :------------------ | | Prepaid research and development | $2,549 | $2,004 | | Prepaid insurance | $691 | $— | | Other prepaid expenses and current assets | $352 | $72 | | Total | $3,592 | $2,076 | Property and Equipment, Net (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :----------------------------------- | :----------------- | :------------------ | | Total gross property and equipment | $7,851 | $7,172 | | Less accumulated depreciation and amortization | $(3,943) | $(3,070) | | Total | $3,908 | $4,102 | Accounts Payable and Accrued Expenses (in thousands) | Item | September 30, 2021 | December 31, 2020 | | :----------------------------------- | :----------------- | :------------------ | | Accounts payable | $1,550 | $2,456 | | Accrued compensation | $3,008 | $2,804 | | Accrued research and development | $15,883 | $4,852 | | Accrued equity issuance costs | $3,947 | $1,143 | | Other accrued expenses | $551 | $813 | | Total | $24,939 | $12,068 | [3. Fair Value Measurements](index=10&type=section&id=3.%20Fair%20Value%20Measurements) - The Company's current financial assets and liabilities have fair values representative of their carrying amounts due to their short-term nature; no financial assets or liabilities were measured at fair value on a recurring basis as of **September 30, 2021**, and **December 31, 2020**[38](index=38&type=chunk) [4. Convertible and Other Debt](index=10&type=section&id=4.%20Convertible%20and%20Other%20Debt) - The Company's **$0.7 million** Paycheck Protection Program (PPP) loan, borrowed in **April 2020**, was fully forgiven in **July 2021**, resulting in recognition of other income[42](index=42&type=chunk)[43](index=43&type=chunk) Interest Expense on Debt (in thousands) | Period | 2021 | 2020 | | :--------------------------------- | :--- | :--- | | Three months ended September 30 | $0 | $86 | | Nine months ended September 30 | $3 | $1,387 | [5. Commitments and Contingencies](index=12&type=section&id=5.%20Commitments%20and%20Contingencies) Expected Future Minimum Operating Lease Payments (in thousands) | Years ending December 31 | Operating Lease | | :------------------------- | :-------------- | | 2021 (3 months) | $370 | | 2022 | $1,555 | | 2023 | $1,636 | | 2024 | $1,685 | | Thereafter | $845 | - The Company is not currently a party to any legal proceedings expected to have a material adverse effect on its business, operating results, or financial condition[46](index=46&type=chunk) [6. Stockholders'/Members' Equity (Deficit)](index=13&type=section&id=6.%20Stockholders'%2FMembers'%20Equity%20%28Deficit%29) - In **December 2020**, the Company completed its IPO, selling **12,075,000 shares** of common stock at **$18.00 per share**, generating **$198.3 million** net proceeds; all outstanding convertible preferred stock converted into common and Class B common stock[52](index=52&type=chunk) - In **September 2021**, the Company completed a Private Placement, selling **2,678,600 shares** of common stock at **$28.00 per share**, raising **$71.0 million** net proceeds[53](index=53&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :------------------------- | :------------------------------ | :----------------------------- | | Research and development | $1,267 | $3,376 | | General and administrative | $3,099 | $17,931 | | Total | $4,366 | $21,307 | - As of **September 30, 2021**, total unrecognized stock-based compensation expense for RSUs was **$19.9 million** (expected over **~2.4 years**) and for stock options was **$14.3 million** (expected over **~3.2 years**)[60](index=60&type=chunk)[62](index=62&type=chunk) Common Stock Reserved for Future Issuance (common equivalent shares) | Item | September 30, 2021 | December 31, 2020 | | :--------------------------------------------------- | :----------------- | :------------------ | | Warrants for the purchase of common stock | 717,674 | 717,674 | | Common stock options and restricted stock units issued and outstanding | 2,553,198 | 2,535,143 | | Awards available for future issuance under the 2020 Plan | 3,338,354 | 2,404,535 | | Awards available for future issuance under the ESPP | 828,713 | 464,829 | | Total common stock reserved for future issuance | 7,437,939 | 6,122,181 | [7. Profits Interest Incentive Plan](index=17&type=section&id=7.%20Profits%20Interest%20Incentive%20Plan) - Prior to the **July 2020** Corporate Reorganization, the Company maintained a Profits Interest Incentive Plan, with Class B units treated as liability awards measured at fair value; this plan was assumed by an affiliate during the reorganization[72](index=72&type=chunk)[73](index=73&type=chunk) Allocation of Equity-Based Compensation for Class B Units (in thousands) | Expense Category | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2020 | | :------------------------- | :------------------------------ | :----------------------------- | | Research and development | $5 | $(3,355) | | General and administrative | $(29) | $(4,270) | | Total | $(24) | $(7,625) | [8. Collaboration, License and Option Agreements](index=18&type=section&id=8.%20Collaboration%2C%20License%20and%20Option%20Agreements) - The Company has a Global Co-Development and Collaboration Agreement with BeiGene for the CAB-CTLA-4 antibody (BA3071); BeiGene is responsible for global development, manufacturing, and commercialization costs, with BioAtla eligible for tiered royalties and up to **$225.5 million** in milestone payments[76](index=76&type=chunk)[77](index=77&type=chunk)[82](index=82&type=chunk) - As of **September 30, 2021**, and **December 31, 2020**, the Company had **$19.8 million** in deferred revenue related to the BeiGene collaboration, expected to be earned upon transfer of know-how and master cell bank within the next twelve months[84](index=84&type=chunk) Collaboration Revenue (in thousands) | Period | 2021 | 2020 | | :--------------------------------- | :--- | :--- | | Three months ended September 30 | $0 | $150 | | Nine months ended September 30 | $250 | $429 | [9. Related Party Transactions](index=19&type=section&id=9.%20Related%20Party%20Transactions) - In **March 2021**, a Transition Agreement with co-founder Carolyn Anderson Short resulted in a lump sum payment, pro-rated bonus, and accelerated full vesting of **7,747** stock options and **138,461** restricted stock units, leading to a **$7.0 million** incremental fair value recognized[89](index=89&type=chunk) - As part of the **September 2021** Private Placement, the Company issued **625,000 shares** of common stock to certain related party stockholders for **$17.5 million**[90](index=90&type=chunk) [10. 401(k) Plan](index=20&type=section&id=10.%20401%28k%29%20Plan) - The Company maintains a 401(k) plan for eligible employees but had not made any matching contributions as of **September 30, 2021**, and **December 31, 2020**[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses BioAtla, Inc.'s financial condition and operational results, highlighting its clinical-stage status, significant losses, funding reliance, and cash flow activities [Overview](index=21&type=section&id=Overview) - BioAtla is a **phase 2 clinical-stage** biopharmaceutical company developing conditionally active biologics (CABs) for solid tumor cancer, designed to be active only in the acidic tumor microenvironment[93](index=93&type=chunk) - The Company has incurred significant losses, with net losses of **$22.9 million** and **$72.0 million** for the three and nine months ended **September 30, 2021**, respectively, and an accumulated deficit of **$162.9 million**[96](index=96&type=chunk) - Current cash and cash equivalents of **$269.9 million** are expected to fund operations into the **first half of 2024**, but substantial additional capital will be required for product development and commercialization[101](index=101&type=chunk) [Impact of COVID-19 on Our Business](index=22&type=section&id=Impact%20of%20COVID-19%20on%20Our%20Business) - The COVID-19 pandemic has caused non-material business disruptions, with the **Phase 2 sarcoma trial** remaining on schedule and modest delays in patient initiations for AXL NSCLC and ROR2 studies, but overall timelines for study completion are unchanged[102](index=102&type=chunk) - The Company's **$0.7 million** PPP loan was fully forgiven in **July 2021**, recognized as other income[102](index=102&type=chunk)[103](index=103&type=chunk) [Financial Operations Overview](index=23&type=section&id=Financial%20Operations%20Overview) - The Company has not generated revenue from product sales and does not expect to in the near future; collaboration revenue for the nine months ended **September 30, 2021**, was **$0.3 million** from legacy service contracts[104](index=104&type=chunk)[106](index=106&type=chunk) - Research and development expenses are expected to increase substantially as the Company advances clinical programs and expands its pipeline[108](index=108&type=chunk) - General and administrative expenses are expected to increase due to operating as a public company, including compliance, legal, and intellectual property costs[110](index=110&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Key Financial Changes (Three Months Ended September 30, 2021 vs. 2020, in thousands) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :---------- | :---------- | :---------- | | Collaboration revenue | $— | $150 | $(150) | | Research and development | $16,553 | $4,864 | $11,689 | | General and administrative | $7,142 | $3,301 | $3,841 | | Loss from operations | $(23,695) | $(8,015) | $(15,680) | | Consolidated net loss | $(22,930) | $(11,632) | $(11,298) | Key Financial Changes (Nine Months Ended September 30, 2021 vs. 2020, in thousands) | Metric | 2021 | 2020 | Change | | :--------------------------------- | :---------- | :---------- | :---------- | | Collaboration revenue | $250 | $429 | $(179) | | Research and development | $41,826 | $9,448 | $32,378 | | General and administrative | $31,376 | $4,625 | $26,751 | | Loss from operations | $(72,952) | $(13,644) | $(59,308) | | Consolidated net loss | $(72,012) | $(19,458) | $(52,554) | - Research and development expenses increased significantly due to manufacturing and clinical development for **BA3011** and **BA3021**, preclinical development for bispecific programs, and increased stock-based compensation[118](index=118&type=chunk)[128](index=128&type=chunk) - General and administrative expenses rose primarily due to increased stock-based compensation, insurance, and personnel-related costs, including severance benefits[119](index=119&type=chunk)[129](index=129&type=chunk) - Interest expense decreased due to the settlement of convertible debt in **July 2020** and the forgiveness of the PPP loan in **July 2021**[122](index=122&type=chunk)[131](index=131&type=chunk) - A **$0.7 million** gain on extinguishment of debt was recognized in **Q3 2021** due to PPP loan forgiveness, contrasting with a **$2.7 million** loss in **Q3 2020** from convertible promissory note settlement[124](index=124&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - As of **September 30, 2021**, the Company had **$269.9 million** in cash and cash equivalents, expected to fund operations into the **first half of 2024**[135](index=135&type=chunk)[139](index=139&type=chunk) - The Company will require substantial additional funding for product development and commercialization, potentially through equity offerings, debt financings, or collaborations[139](index=139&type=chunk)[140](index=140&type=chunk) Cash Flow Summary (Nine Months Ended September 30, in thousands) | Cash Flow Activity | 2021 | 2020 | | :------------------------- | :---------- | :---------- | | Operating activities | $(41,265) | $(22,328) | | Investing activities | $(835) | $(195) | | Financing activities | $73,420 | $75,576 | | Net increase in cash and cash equivalents | $31,320 | $53,053 | - Net cash used in operating activities increased to **$41.3 million** in **2021** from **$22.3 million** in **2020**, driven by higher net loss and changes in operating assets and liabilities[142](index=142&type=chunk)[143](index=143&type=chunk) - Net cash provided by financing activities was **$73.4 million** in **2021**, primarily from a **$75.0 million** private placement of common stock, offset by IPO costs[145](index=145&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The Company's financial statements rely on estimates and assumptions, particularly for revenue recognition, R&D accruals, equity-based compensation, and fair value measurements; no material changes to critical accounting policies were reported during the nine months ended **September 30, 2021**[146](index=146&type=chunk)[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=32&type=section&id=Off-Balance%20Sheet%20Arrangements) - The Company has not entered into any off-balance sheet arrangements[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Quantitative and qualitative disclosures about market risk are not applicable to BioAtla, Inc. as a smaller reporting company - Quantitative and qualitative disclosures about market risk are not applicable to BioAtla, Inc. as a smaller reporting company[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the Company's disclosure controls and procedures as effective as of September 30, 2021, with no material changes in internal control over financial reporting - As of **September 30, 2021**, the Company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level[149](index=149&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended **September 30, 2021**[151](index=151&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The Company is not currently a party to any legal proceedings that, if determined adversely, would individually or in aggregate have a material adverse effect on its business, operating results, or financial condition[152](index=152&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Outlines significant risks of investing in BioAtla, Inc., covering financial position, product development, regulatory approvals, operational challenges, and intellectual property [Risk Factor Summary](index=33&type=section&id=Risk%20Factor%20Summary) - Key risks include the Company's limited operating history, significant losses, need for substantial additional capital, potential product development failures or delays, and dependence on its patented CAB technology platform[153](index=153&type=chunk)[154](index=154&type=chunk) - Other risks involve market acceptance of novel therapeutic modalities, unpredictability of clinical trial results, competition from other cancer treatments, and challenges in obtaining and maintaining regulatory approvals[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [Risks related to our financial position and need for additional capital](index=34&type=section&id=Risks%20related%20to%20our%20financial%20position%20and%20need%20for%20additional%20capital) - BioAtla is a clinical-stage biopharmaceutical company with no approved products and a history of significant losses, including **$72.0 million** for the nine months ended **September 30, 2021**, and an accumulated deficit of **$162.9 million**[162](index=162&type=chunk)[163](index=163&type=chunk) - The Company will require substantial additional capital beyond its current **$269.9 million** cash and cash equivalents to fund operations into the **first half of 2024**, with future funding dependent on development progress and market conditions[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) [Risks related to the discovery, development and commercialization of our product candidates](index=36&type=section&id=Risks%20related%20to%20the%20discovery%2C%20development%20and%20commercialization%20of%20our%20product%20candidates) - Product candidates, including **BA3011** and **BA3021** in **Phase 2 trials**, may fail or be delayed in development due to issues like negative preclinical/clinical results, regulatory hurdles, patient recruitment challenges, or manufacturing problems[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - The Company's future success is heavily dependent on its patented CAB technology platform; any setbacks could detrimentally impact all product candidates[174](index=174&type=chunk)[175](index=175&type=chunk) - Undesirable side effects, such as reversible myelosuppression and transient liver enzyme elevations observed in **BA3011** and **BA3021** trials, could halt clinical development or delay regulatory approval[196](index=196&type=chunk)[197](index=197&type=chunk) - Competition from other biopharmaceutical companies developing novel treatments for cancer, including immune-based cellular therapies and ADCs, poses a significant risk to the commercial viability of BioAtla's product candidates[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Risks related to regulatory approval and other legal compliance matters](index=42&type=section&id=Risks%20related%20to%20regulatory%20approval%20and%20other%20legal%20compliance%20matters) - Obtaining U.S. or foreign regulatory approval is costly, lengthy, and uncertain, with no guarantee that any product candidates will receive approval[222](index=222&type=chunk)[223](index=223&type=chunk) - The Company intends to seek accelerated approval pathways for **BA3011** and **BA3021**, but success is not guaranteed, and confirmatory studies may be required post-approval[229](index=229&type=chunk)[230](index=230&type=chunk) - Post-approval, products are subject to ongoing regulatory obligations, including potential labeling restrictions, post-marketing studies, and market withdrawal, with non-compliance leading to significant penalties[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - Healthcare legislative reforms, such as the **ACA** and drug pricing scrutiny, could adversely impact the Company's business by affecting reimbursement policies and market access[254](index=254&type=chunk)[255](index=255&type=chunk)[258](index=258&type=chunk) [Risks related to employee matters, managing our growth and other risks related to our business](index=57&type=section&id=Risks%20related%20to%20employee%20matters%2C%20managing%20our%20growth%20and%20other%20risks%20related%20to%20our%20business) - The Company's success depends on attracting and retaining qualified senior management and scientific personnel, with intense competition in the biopharmaceutical field[278](index=278&type=chunk)[279](index=279&type=chunk) - Failure to establish effective sales, marketing, and distribution capabilities, either internally or through third parties, could hinder commercialization efforts and future product revenue[280](index=280&type=chunk)[281](index=281&type=chunk) - Growth management challenges include recruiting and integrating employees, managing internal development, and improving operational controls, especially with reliance on numerous external consultants[282](index=282&type=chunk)[284](index=284&type=chunk) - Cybersecurity attacks or data breaches could disrupt operations, lead to significant liabilities, and harm the Company's reputation[285](index=285&type=chunk)[286](index=286&type=chunk) - Operations in China through BioDuro expose the Company to risks from changes in Chinese laws, political unrest, and economic instability, potentially affecting research and development activities[288](index=288&type=chunk)[289](index=289&type=chunk)[290](index=290&type=chunk) - Concentration of operations in San Diego, California, and reliance on BioDuro in China exposes the Company to risks from natural disasters, potentially disrupting business continuity[291](index=291&type=chunk)[292](index=292&type=chunk) - The COVID-19 pandemic continues to pose risks to preclinical and clinical trial operations, potentially delaying patient enrollment, data readouts, and regulatory filings[295](index=295&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) [Risks related to our dependence on third parties](index=62&type=section&id=Risks%20related%20to%20our%20dependence%20on%20third%20parties) - Reliance on third-party collaborators, like BeiGene for **BA3071**, means limited control over resource allocation and potential for delays or termination of development programs[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) - Failure of third-party CROs to perform contractually, meet regulatory requirements, or adhere to deadlines could delay development programs[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - Dependence on third-party contract manufacturers for product candidates increases the risk of insufficient supply, quality issues, or delays, potentially impacting clinical trials and commercialization[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk) - Manufacturing biotechnology products is complex; difficulties in production, contamination, or raw material shortages could delay or stop development and commercialization[317](index=317&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk)[320](index=320&type=chunk) [Risks related to intellectual property](index=68&type=section&id=Risks%20related%20to%20intellectual%20property) - The Company's success depends on obtaining, maintaining, and protecting patents and other IP rights for its product candidates and technologies, which is an expensive and time-consuming process[321](index=321&type=chunk)[322](index=322&type=chunk) - Patents may not be sufficiently broad, could be challenged, or found invalid/unenforceable, and competitors may design around them[322](index=322&type=chunk)[323](index=323&type=chunk)[324](index=324&type=chunk) - Failure to protect trade secrets and confidential know-how could harm the Company's competitive position, as enforcement is difficult and costly[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) - The limited lifespan of patents (generally **20 years**) means protection for product candidates might expire before or shortly after commercialization, leading to increased competition[333](index=333&type=chunk) - Changes in U.S. patent law (e.g., Leahy-Smith Act) and interpretations could increase uncertainties and costs in patent prosecution and enforcement[335](index=335&type=chunk)[338](index=338&type=chunk)[339](index=339&type=chunk) - Third-party intellectual property rights could prevent or delay drug discovery and commercialization, potentially requiring costly litigation or licenses on unfavorable terms[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - Failure to comply with obligations under license or collaboration agreements could lead to damages or loss of essential intellectual property rights[362](index=362&type=chunk)[363](index=363&type=chunk) - Protecting intellectual property rights globally is challenging due to varying laws and enforcement difficulties in certain countries, potentially diminishing the value of these rights[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) [Risks related to our common stock](index=79&type=section&id=Risks%20related%20to%20our%20common%20stock) - The Company's operating results are subject to significant fluctuations, and failure to meet investor or analyst expectations could cause stock price volatility[371](index=371&type=chunk)[372](index=372&type=chunk) - Future issuances of equity or convertible debt will dilute existing shareholders' ownership and may adversely affect the stock price[375](index=375&type=chunk) - The dual-class common stock structure (voting common, non-voting Class B convertible) may limit common stockholders' influence on corporate matters[376](index=376&type=chunk)[377](index=377&type=chunk) - Principal stockholders and management own a significant percentage (**46.8%** as of **Sep 30, 2021**) of outstanding common stock, allowing them to exert significant control over corporate actions[380](index=380&type=chunk)[381](index=381&type=chunk) - The Company will cease to be an 'emerging growth company' and 'smaller reporting company' as of **December 31, 2021**, leading to increased compliance costs and disclosure requirements[384](index=384&type=chunk)[385](index=385&type=chunk)[387](index=387&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could make acquisitions more difficult and prevent changes in management[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales were reported; **$3.4 million** of **$198.3 million** IPO net proceeds used by September 30, 2021, with no material change in planned use - No unregistered sales of equity securities were reported[402](index=402&type=chunk) - As of **September 30, 2021**, **$3.4 million** of the **$198.3 million** net proceeds from the **December 2020 IPO** had been used, consistent with the planned use of proceeds[402](index=402&type=chunk)[403](index=403&type=chunk) [Item 3. Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities - No defaults upon senior securities were reported[404](index=404&type=chunk) [Item 4. Mine Safety Disclosures](index=86&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[404](index=404&type=chunk) [Item 5. Other Information](index=86&type=section&id=Item%205.%20Other%20Information) The Company reported no other information - No other information was reported[404](index=404&type=chunk) [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL financial data - Exhibits include the Form of Stock Purchase Agreement, Non-Employee Director Stock Option Agreement, Employee Stock Option Agreement, CEO and CFO certifications (**302** and **906**), and Inline XBRL financial data[405](index=405&type=chunk)[406](index=406&type=chunk) ```

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) BioAtla, Inc. reported a **$18.7 million** net loss for Q1 2021, significantly up from **$1.6 million** in Q1 2020, due to increased R&D and G&A expenses, with cash and equivalents at **$221.2 million** [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2021, total assets decreased to **$229.1 million** from **$244.9 million** at year-end 2020, mainly due to reduced cash, with total liabilities at **$33.2 million** and equity at **$195.9 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 (unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $221,199 | $238,605 | | Total current assets | $224,582 | $240,681 | | **Total assets** | **$229,087** | **$244,937** | | **Liabilities & Equity** | | | | Total current liabilities | $30,530 | $32,261 | | **Total liabilities** | **$33,171** | **$34,963** | | **Total stockholders' equity** | **$195,916** | **$209,974** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For Q1 2021, the company reported no collaboration revenue and a **$18.7 million** net loss, or **$0.56 per share**, significantly higher than the **$1.6 million** loss in Q1 2020, driven by increased operating expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Collaboration revenue | $0 | $89 | | Research and development expense | $10,423 | $1,661 | | General and administrative expense | $8,374 | $(463) | | **Loss from operations** | **$(18,797)** | **$(1,109)** | | **Consolidated net loss** | **$(18,701)** | **$(1,604)** | | Net loss per common share | $(0.56) | N/A | [Condensed Consolidated Statement of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from **$210.0 million** at December 31, 2020, to **$195.9 million** at March 31, 2021, primarily due to a **$18.7 million** net loss, partially offset by **$4.6 million** in stock-based compensation - The net loss of **$18.7 million** was the primary driver for the reduction in stockholders' equity during the first quarter of **2021**[14](index=14&type=chunk) - Stock-based compensation added **$4.6 million** to additional paid-in capital, partially offsetting the impact of the net loss[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for Q1 2021 increased to **$15.0 million** from **$3.8 million** in Q1 2020, resulting in a **$17.4 million** net decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,994) | $(3,814) | | Net cash used in investing activities | $(501) | $(20) | | Net cash (used in) provided by financing activities | $(1,911) | $500 | | **Net decrease in cash and cash equivalents** | **$(17,406)** | **$(3,334)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail clinical development of CABs, confirm sufficient cash for at least one year, and disclose **$19.8 million** in deferred BeiGene collaboration revenue and a **$1.0 million** non-cash charge from a transition agreement - The company is in clinical development of its two lead **CAB antibody drug conjugates (CAB ADC)** targeting AXL and ROR2 receptors[19](index=19&type=chunk) - Management concluded there is **not substantial doubt** about the Company's ability to continue as a going concern, with cash **sufficient to fund operations** for at least one year from the financial statement issuance date[23](index=23&type=chunk) - As of March 31, **2021**, the company had **$19.8 million** in deferred revenue from its BeiGene collaboration, expected to be recognized upon transfer of know-how and master cell bank within the next twelve months[76](index=76&type=chunk) - A **Transition Agreement** with co-founder Carolyn Anderson Short resulted in accelerated vesting of equity awards, leading to an incremental fair value of **$7.0 million** to be recognized over the transition period, with a **$1.0 million** non-cash charge recognized in Q1 **2021**[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The clinical-stage biopharmaceutical company incurred a **$18.7 million** net loss for Q1 2021, with **$221.2 million** cash from its December 2020 IPO, expected to fund operations through 2022, despite increasing R&D and G&A expenses - The company is a clinical-stage biopharmaceutical company developing novel **Conditionally Active Biologics (CABs)** designed to selectively bind to targets in the acidic tumor microenvironment, aiming to reduce on-target, off-tumor toxicity[83](index=83&type=chunk) - Net loss for Q1 **2021** was **$18.7 million**, and the **accumulated deficit reached $109.6 million** as of March 31, **2021**. Losses are expected to continue due to ongoing R&D for product candidates like BA3011 and BA3021[86](index=86&type=chunk) - Following its December **2020** IPO, the company had cash and cash equivalents of **$221.2 million** as of March 31, **2021**, which is expected to fund operations at least through the end of **2022**[91](index=91&type=chunk)[117](index=117&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Collaboration revenue decreased to zero in Q1 2021, while R&D expenses surged by **$8.8 million** to **$10.4 million** and G&A expenses increased by **$8.9 million** to **$8.4 million**, widening the net loss to **$18.7 million** Comparison of Operations (in thousands) | Metric | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Collaboration revenue | $0 | $89 | $(89) | | Research and development | $10,423 | $1,661 | $8,762 | | General and administrative | $8,374 | $(463) | $8,837 | | **Loss from operations** | **$(18,797)** | **$(1,109)** | **$(17,688)** | | **Consolidated net loss** | **$(18,701)** | **$(1,604)** | **$(17,097)** | Research and Development Expense Breakdown (in thousands) | Category | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | BA3011 (AXL-ADC) | $4,573 | $879 | $3,694 | | BA3021 (ROR2-ADC) | $1,328 | $924 | $404 | | Other CAB Programs | $1,720 | $632 | $1,088 | | Personnel and related | $1,233 | $1,150 | $83 | | Equity-based compensation | $954 | $(2,523) | $3,477 | | **Total R&D Expenses** | **$10,423** | **$1,661** | **$8,762** | - The **$8.9 million** increase in G&A expenses was primarily driven by a **$3.7 million** increase in stock-based compensation, a **$3.2 million** increase related to **2020** fair value adjustments to the former profits interest plan, and increased insurance and professional fees[109](index=109&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2021, the company held **$221.2 million** in cash, deemed sufficient to fund operations through 2022, despite **$15.0 million** net cash used in operating activities for Q1 2021 - As of March 31, **2021**, the company had cash and cash equivalents of **$221.2 million** and believes its current capital is **sufficient to fund operations** at least through the end of **2022**[112](index=112&type=chunk)[117](index=117&type=chunk) - In April **2020**, the company received a **$0.7 million** loan under the **Paycheck Protection Program (PPP)** of the **CARES Act**, which matures in April **2022** and bears a **1%** interest rate[114](index=114&type=chunk) Cash Flow Summary (in thousands) | Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash used in Operating activities | $(14,994) | $(3,814) | | Net cash used in Investing activities | $(501) | $(20) | | Net cash (used in) provided by Financing activities | $(1,911) | $500 | [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a **smaller reporting company** - The company is a **smaller reporting company** and is therefore not required to provide these disclosures[127](index=127&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, **2021**, the company's **disclosure controls and procedures were effective** at the reasonable assurance level[128](index=128&type=chunk) - **No changes occurred** during the quarter ended March 31, **2021**, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[129](index=129&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a **material adverse effect** on its business or financial condition - The company reports that it is **not currently involved in any material legal proceedings**[130](index=130&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces extensive risks as a clinical-stage entity with a history of losses, requiring additional capital, and dependent on its CAB technology, regulatory approvals, and third-party reliance, with operational risks in China and from COVID-19 - The company is a clinical-stage entity with a **history of significant losses** and expects to continue incurring losses, making its **future viability difficult to assess**[133](index=133&type=chunk)[134](index=134&type=chunk) - **Substantial additional capital is required** to finance operations; **failure to raise capital could force delays or elimination** of research and development programs[136](index=136&type=chunk) - The company is **substantially dependent on the success** of its patented **Conditionally Active Biologics (CAB)** technology platform[143](index=143&type=chunk) - A portion of research and development occurs in China, **exposing the company to risks** from Chinese legal interpretation, trade wars, or political unrest[238](index=238&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales occurred; **$217.4 million** gross IPO proceeds from December 2020 remain unused as of March 31, 2021, with no change in planned use - The company's IPO in December **2020** generated gross proceeds of **$217.4 million**[338](index=338&type=chunk) - As of March 31, **2021**, the company has **not used any of the proceeds** from its IPO, and the **planned use of proceeds remains unchanged** from what was described in the final prospectus[338](index=338&type=chunk) [Defaults Upon Senior Securities](index=71&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports **no defaults** upon senior securities - **None**[339](index=339&type=chunk) [Mine Safety Disclosures](index=71&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) **Not applicable** to the company - **Not applicable**[339](index=339&type=chunk) [Other Information](index=71&type=section&id=Item%205.%20Other%20Information) The company reports **no other information** for this item - **None**[339](index=339&type=chunk) [Exhibits](index=72&type=section&id=Item%206.%20Exhibits) Exhibits include a **Transition Agreement** with Carolyn Anderson Short and **CEO and CFO certifications** - Exhibits filed include **CEO and CFO certifications** required by the **Sarbanes-Oxley Act of 2002**[342](index=342&type=chunk) - A **Transition Agreement** dated March 23, **2021**, between the company and Carolyn Anderson Short is included as an exhibit[342](index=342&type=chunk)

PART I [Business](index=4&type=section&id=Item%201.%20Business) BioAtla develops Conditionally Active Biologics (CABs) for solid tumors, with lead ADCs BA3011 and BA3021 in Phase 2 trials, leveraging acidic tumor microenvironments to reduce toxicity [Overview](index=4&type=section&id=Overview) BioAtla develops CABs for solid tumors, utilizing the acidic tumor microenvironment for selective binding to reduce toxicity, with lead candidates BA3011 and BA3021 in Phase 2 trials - The company develops highly specific and selective antibody-based therapeutics (CABs) that target the acidic tumor microenvironment to treat solid tumors, aiming to reduce toxicity in healthy tissue[11](index=11&type=chunk) - BioAtla has initiated potentially registration-enabling Phase 2 trials for its two most advanced antibody-drug conjugate (ADC) product candidates, BA3011 (targeting AXL) and BA3021 (targeting ROR2), across multiple cancer indications including sarcoma, NSCLC, and melanoma[12](index=12&type=chunk) - The company is collaborating with BeiGene to initiate Phase 1 trials in 2021 for its immuno-oncology antibody, BA3071 (targeting CTLA-4), which is designed to overcome the toxicity limitations of existing anti-CTLA-4 therapies[13](index=13&type=chunk) [Our Pipeline](index=6&type=section&id=Our%20pipeline) BioAtla's pipeline features CAB ADCs BA3011 (AXL) and BA3021 (ROR2) in Phase 2, CAB antibody BA3071 (CTLA-4) in Phase 1, and preclinical bispecifics, with plans for multiple IND submissions by 2022 BioAtla Product Pipeline Summary | Product Candidate | Target | Modality | Development Stage | Indications | | :--- | :--- | :--- | :--- | :--- | | **BA3011** | AXL | CAB ADC | Phase 2 | Soft Tissue & Bone Sarcoma, NSCLC, Ovarian Cancer | | **BA3021** | ROR2 | CAB ADC | Phase 2 | NSCLC, Melanoma, Ovarian Cancer | | **BA3071** | CTLA-4 | CAB Antibody | Phase 1 (planned 2021) | Multiple Solid Tumors | | **BA3182** | EpCAM x CD3 | CAB Bispecific | IND-Enabling | Solid Tumors | | **BA3142** | B7-H3 x CD3 | CAB Bispecific | IND-Enabling | Solid Tumors | | **Multiple Candidates** | EGFR x CD3, Nectin-4 x CD3 | CAB Bispecific | Preclinical / Discovery | Solid Tumors | - The company has developed a quantitative biomarker assay, the AXL Tumor membrane Percent Score (TmPS), to identify patients most likely to respond to BA3011, based on the level of AXL expression on the tumor membrane[19](index=19&type=chunk) - BioAtla has advanced two CAB bispecific antibody candidates, BA3182 (EpCAM x CD3) and BA3142 (B7-H3 x CD3), into IND-enabling studies in the second half of 2020, with a goal to submit up to four US INDs in 2022 for its bispecific or ADC molecules[33](index=33&type=chunk)[147](index=147&type=chunk) [Our Strategy](index=9&type=section&id=Our%20strategy) BioAtla's strategy involves advancing lead CAB candidates BA3011 and BA3021 to commercialization, expanding its pipeline with bispecifics, strengthening IP, and forming strategic collaborations to maximize platform value - Advance lead candidates BA3011 and BA3021 through potentially registration-enabling Phase 2 trials and toward commercialization, using quantitative biomarker assays (TmPS) to select patients[34](index=34&type=chunk) - Leverage the CAB technology to develop a broad pipeline of new molecules, including bispecific T cell engagers and immuno-oncology antibodies[34](index=34&type=chunk) - Maintain and strengthen its intellectual property portfolio, which as of December 31, 2020, included **492 patents and patent applications**[34](index=34&type=chunk) - Selectively enter into strategic collaborations for specific geographic regions, indications, or combinations to maximize the value of its platform, similar to the existing collaboration for BA3071[35](index=35&type=chunk) [Our Technology](index=10&type=section&id=Our%20technology) BioAtla's CAB technology exploits the acidic tumor microenvironment (Warburg Effect) for pH-dependent, reversible binding, aiming to reduce on-target, off-tumor toxicity and improve pharmacokinetics compared to traditional antibodies - The company's CAB technology leverages the low pH (acidic) conditions of the tumor microenvironment, caused by the Warburg Effect, where cancer cells preferentially use glycolysis for energy, producing lactic acid[41](index=41&type=chunk)[46](index=46&type=chunk) - CAB antibodies are designed to be active and bind to targets in the acidic TME (pH as low as **5.8**) but are reversibly inactivated in the normal physiological environment (pH **7.4**), aiming to reduce systemic toxicity[51](index=51&type=chunk)[52](index=52&type=chunk)[54](index=54&type=chunk) - Potential advantages of the CAB platform over traditional antibodies include a wider therapeutic window, reduced on-target off-tumor toxicity, increased drug exposure to tumors, and improved pharmacokinetics by avoiding target-mediated drug disposition (TMDD)[57](index=57&type=chunk) - In a preclinical non-human primate study, a CAB ADC targeting AXL showed minimal liver toxicity (ALT increase) compared to a sharp increase observed with a traditional AXL ADC, supporting the technology's potential to reduce toxicity[58](index=58&type=chunk) [Clinical Trials](index=15&type=section&id=Clinical%20trials) BioAtla's lead CAB ADCs, BA3011 and BA3021, are in Phase 2 trials, showing partial responses and biomarker correlation, while BA3071 (CTLA-4) is planned for Phase 1, and bispecifics are in IND-enabling studies with reduced systemic toxicity [BA3011 (AXL-Targeting CAB-ADC)](index=15&type=section&id=BA3011) BA3011's Phase 1 trial showed **five partial responses** in 55 patients, particularly with high AXL expression, establishing a 1.8 mg/kg dose, with Phase 2 trials initiated for sarcoma and NSCLC - In the Phase 1 trial, **five patients** achieved a confirmed partial response (PR): **four with sarcomas** and **one with NSCLC**. Antitumor activity showed a correlation with high tumor membrane expression of AXL (TmPS ≥ **70%**)[65](index=65&type=chunk)[67](index=67&type=chunk) - BA3011 was generally well-tolerated, with manageable toxicities consistent with other MMAE-based ADCs. Notably, no adverse events appeared related to on-target injury of normal, AXL-expressing tissues[80](index=80&type=chunk)[81](index=81&type=chunk) - The estimated half-life of BA3011 was approximately **four days**, twice that of a non-CAB AXL ADC (enapotamab vedotin), suggesting decreased target-mediated drug disposition (TMDD)[80](index=80&type=chunk)[87](index=87&type=chunk) - Potentially registration-enabling Phase 2 trials have been initiated for BA3011 in soft-tissue/bone sarcoma (AXL TmPS ≥ **70%**) and in NSCLC (AXL TmPS ≥ **50%**)[92](index=92&type=chunk)[94](index=94&type=chunk)[99](index=99&type=chunk) [BA3021 (ROR2-Targeting CAB-ADC)](index=25&type=section&id=BA3021) BA3021's Phase 1 trial in 59 patients yielded **four partial responses** across NSCLC, melanoma, and head and neck cancer, correlating with ROR2 expression, with Phase 2 trials initiated for melanoma and NSCLC - The Phase 1 trial of BA3021 resulted in **four partial responses**: **two in NSCLC**, **one in metastatic melanoma** (approx. **80% tumor reduction**), and **one in advanced head and neck cancer**[107](index=107&type=chunk)[110](index=110&type=chunk)[114](index=114&type=chunk) - Similar to BA3011, antitumor response in NSCLC patients was associated with high tumor membrane expression of the target, ROR2 (TmPS of at least **70%**)[109](index=109&type=chunk) - BA3021 was generally well-tolerated, with no adverse events appearing to be related to on-target injury of normal, ROR2-expressing tissues. Reported toxicities were consistent with off-target effects of free MMAE[115](index=115&type=chunk)[116](index=116&type=chunk) - A potentially registration-enabling Phase 2 trial has been initiated for BA3021 in melanoma and NSCLC patients who have progressed on prior PD-1/L1 inhibitors and have a ROR2 TmPS of **50%** or more[119](index=119&type=chunk)[122](index=122&type=chunk) [BA3071 (CTLA-4 Targeting CAB Antibody)](index=31&type=section&id=BA3071) BA3071, a CAB anti-CTLA-4 antibody, showed comparable antitumor efficacy to ipilimumab in preclinical models with reduced systemic T cell activation and fewer GI adverse events, with a Phase 1 trial planned for 2021 - In a mouse model, BA3071 demonstrated potent antitumor activity equivalent to an ipilimumab analog, including **two complete responses**[127](index=127&type=chunk)[128](index=128&type=chunk) - Unlike the ipilimumab analog, BA3071 did not lead to systemic stimulation of T cells in peripheral blood in mice, suggesting tumor-restricted activity that may lead to fewer systemic toxicities[130](index=130&type=chunk)[131](index=131&type=chunk) - In a non-human primate toxicity study, the combination of BA3071 and nivolumab was associated with only a **single gastrointestinal adverse event**, compared to **33 events** for the ipilimumab and nivolumab combination[131](index=131&type=chunk)[133](index=133&type=chunk) - The company plans to work with its partner BeiGene to initiate a Phase 1 dose-escalation trial of BA3071 in advanced solid tumor patients in 2021, both as a monotherapy and in combination with tislelizumab (an anti-PD-1 antibody)[135](index=135&type=chunk) [Bispecific Candidates](index=33&type=section&id=Bispecific%20candidates) BioAtla is developing CAB bispecific T-cell engagers for tumor-restricted activation, with preclinical data showing potent antitumor activity and reduced systemic toxicity, advancing BA3182 and BA3142 into IND-enabling studies - The company's EpCAM x CD3 bispecific antibody with a CAB CD3 binding domain showed potent antitumor activity in a mouse xenograft model, comparable to a conventional bispecific[136](index=136&type=chunk)[137](index=137&type=chunk)[139](index=139&type=chunk) - In non-human primates, the EpCAM x CAB CD3 bispecific led to much lower levels of systemic IL-6, an inflammatory cytokine, and significantly better safety (**no deaths**) compared to a conventional EpCAM x CD3 bispecific, which caused severe toxicities and death at the same dose levels[140](index=140&type=chunk)[142](index=142&type=chunk) - Two CAB bispecific antibody candidates, BA3182 (EpCAM x CD3) and BA3142 (B7-H3 x CD3), were advanced into IND-enabling studies in the second half of 2020[147](index=147&type=chunk) [Competition](index=36&type=section&id=Competition) BioAtla faces intense competition in the biopharmaceutical industry, particularly in the ADC space with **10 approved** and **60 in clinical development** as of February 2020, from entities with significantly greater resources - The company faces substantial competition from a wide variety of institutions, including large biopharmaceutical companies and specialty biotechnology companies with greater financial and development resources[149](index=149&type=chunk)[152](index=152&type=chunk) - As of February 2020, there were **10 approved ADCs** and approximately **60 ADCs in clinical development**, representing a key area of competition for BA3011 and BA3021[150](index=150&type=chunk) - The company faces direct competition on specific targets, such as from NBE-Therapeutics AG, which is also developing therapies for ROR2, the target of BA3021[150](index=150&type=chunk) [Manufacturing](index=37&type=section&id=Manufacturing) BioAtla relies entirely on third-party CMOs for all manufacturing, from preclinical to potential commercial stages, to maintain an efficient infrastructure and focus on core development - The company does not own or operate manufacturing facilities and relies on third-party contract manufacturing organizations (CMOs) for all production of its product candidates for preclinical and clinical trials[156](index=156&type=chunk) - This outsourcing strategy is intended to maintain an efficient infrastructure, eliminating the need for investment in internal manufacturing facilities and allowing focus on product development[156](index=156&type=chunk) [Collaborations](index=37&type=section&id=Collaborations) BioAtla strategically collaborates, notably with BeiGene for BA3071, receiving a **$20 million** upfront payment and potential milestones/royalties, while also out-licensing technology for specific fields and territories - Entered a global collaboration with BeiGene for BA3071, receiving a **$20 million** upfront payment and **$5 million** for manufacturing costs. BeiGene is responsible for all global development, manufacturing, and commercialization costs[158](index=158&type=chunk)[160](index=160&type=chunk) - Under the BeiGene agreement, BioAtla is eligible for up to **$225.5 million** in development, regulatory, and commercial milestones, plus tiered royalties ranging from high-single digits to low twenties on worldwide sales[160](index=160&type=chunk) - The company has out-licensed its technology for specific fields or territories through exclusive agreements with Inversagen (aging-related diseases), Himalaya Therapeutics (Greater China), BioAtla Holdings (CAR-T), and EXUMA Biotech (specific CAR-T targets)[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[168](index=168&type=chunk) [Intellectual Property](index=40&type=section&id=Intellectual%20property) BioAtla's IP portfolio, comprising **492 patents and applications** as of December 31, 2020, protects its CAB technology and product candidates, with key composition of matter patents expiring no earlier than 2037-2039 - As of December 31, 2020, the company's intellectual property portfolio includes **492 patents and patent applications**, comprising **257 issued patents**, **9 allowed applications**, and **226 pending applications**[172](index=172&type=chunk) - Composition of matter claims for BA3011 and BA3021, if issued, would not expire before **2037**. For BA3071, they would not expire before **2039**[184](index=184&type=chunk)[185](index=185&type=chunk) - The company holds **14 issued U.S. patents** covering various aspects of the manufacturing methods used to generate CAB antibodies, with patent terms expiring from **2030 to 2036**[186](index=186&type=chunk) [Government Regulation and Product Approval](index=44&type=section&id=Government%20regulation%20and%20product%20approval) BioAtla's biologics face extensive FDA and international regulation, requiring preclinical, IND, and multi-phase clinical trials for BLA approval, with potential for expedited programs and ongoing post-market compliance - Biologic products are regulated in the U.S. by the FDA under the FDCA and PHSA, requiring approval of a Biologics License Application (BLA) before marketing[191](index=191&type=chunk) - The development process involves extensive preclinical testing (GLP), submission of an IND, and three sequential phases of clinical trials (GCP) to establish safety and efficacy[192](index=192&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) - The FDA offers expedited programs such as Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval for drugs that address serious conditions and unmet medical needs[213](index=213&type=chunk)[214](index=214&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - In the European Union, marketing authorization requires submitting an MAA to the EMA via a centralized procedure for biologics, which involves a **210-day** evaluation period by the CHMP[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - If a companion diagnostic is essential for the safe and effective use of a product, the FDA generally requires simultaneous approval of the diagnostic with the therapeutic product[230](index=230&type=chunk) [Human Capital Management](index=60&type=section&id=Human%20Capital%20Management) As of December 31, 2020, BioAtla had **36 employees** and **18 contractors** in China, with a compensation program focused on attracting talent through salary, bonuses, and equity, while promoting diversity and development - As of December 31, 2020, the company had **36 employees** and **18 independent contractors in China**. None of the employees are subject to a collective bargaining agreement[282](index=282&type=chunk) - Compensation includes base salary, annual incentive bonuses, and long-term equity awards to align employee and stockholder interests[284](index=284&type=chunk) - The company promotes diversity and inclusion, focusing on providing a safe work environment, equal employment opportunity, and learning and development opportunities[285](index=285&type=chunk) [Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) BioAtla faces significant risks including historical losses, need for capital, reliance on its CAB platform and clinical success, intense competition, regulatory hurdles, third-party dependencies, IP challenges, and COVID-19 impacts - The company has a history of significant losses (**$35.9 million in 2020**) and expects to continue incurring them, requiring substantial additional capital to finance operations[291](index=291&type=chunk)[293](index=293&type=chunk)[296](index=296&type=chunk) - Success is substantially dependent on the proprietary CAB technology platform; any failure or adverse event related to the platform could have a detrimental impact on all product candidates[291](index=291&type=chunk)[306](index=306&type=chunk) - The company faces risks of clinical trial delays or failures, and positive early-stage results may not be predictive of late-stage outcomes. The FDA has not opined on whether the current Phase 2 trials will be sufficient for approval[291](index=291&type=chunk)[303](index=303&type=chunk)[318](index=318&type=chunk) - Reliance on third parties for collaborations (e.g., BeiGene), clinical trial conduct, and manufacturing presents risks related to performance, supply chain disruptions, and regulatory compliance[445](index=445&type=chunk)[454](index=454&type=chunk)[456](index=456&type=chunk) - The COVID-19 pandemic poses a risk of significant disruption to preclinical studies and clinical trials, which could delay or prevent regulatory approvals[292](index=292&type=chunk)[441](index=441&type=chunk) [Unresolved Staff Comments](index=119&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - The company states that this item is not applicable[557](index=557&type=chunk) [Properties](index=120&type=section&id=Item%202.%20Properties) BioAtla leases its **43,377 square feet** headquarters in San Diego, California, with the current lease terminating on February 28, 2025 - The company leases approximately **43,377 square feet** of office and laboratory space for its headquarters in San Diego, California[558](index=558&type=chunk) - The current lease for its headquarters terminates on **February 28, 2025**[558](index=558&type=chunk) [Legal Proceedings](index=120&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings deemed to have a material adverse effect on its business or financial condition - The company is not currently a party to any material legal proceedings[559](index=559&type=chunk) [Mine Safety Disclosures](index=120&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports this item as not applicable due to the absence of mining operations - The company states that this item is not applicable[560](index=560&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=119&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BioAtla's common stock (BCAB) began trading on Nasdaq on December 16, 2020; the company has never paid dividends and completed a **$72.5 million** Series D preferred stock sale and a **$217.4 million** IPO in 2020 - The company's common stock began trading on the Nasdaq Global Market under the symbol **"BCAB"** on **December 16, 2020**[561](index=561&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future, intending to retain earnings for business growth[563](index=563&type=chunk) - On July 13, 2020, the company sold approximately **140.6 million shares** of Series D preferred stock for aggregate proceeds of **$72.5 million** in an unregistered transaction[565](index=565&type=chunk) - The IPO on December 15, 2020, involved the sale of **12,075,000 shares** at **$18.00 per share**, generating gross proceeds of **$217.4 million**[569](index=569&type=chunk) [Selected Financial Data](index=120&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable as it is a smaller reporting company[571](index=571&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=121&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) BioAtla reported a **$35.9 million** net loss in 2020, driven by decreased collaboration revenue and increased G&A, partially offset by reduced R&D, with **$238.6 million** cash expected to fund operations through 2022 [Results of Operations](index=126&type=section&id=Results%20of%20operations) BioAtla's net loss increased to **$35.9 million** in 2020, primarily due to a **$4.8 million** decrease in collaboration revenue and a **$3.0 million** rise in G&A expenses, partially offset by a **$6.0 million** R&D reduction Comparison of Operations (Years Ended Dec 31) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $429 | $5,200 | $(4,771) | | Research & Development | $19,933 | $25,919 | $(5,986) | | General & Administrative | $10,595 | $7,549 | $3,046 | | Loss from Operations | $(30,099) | $(28,268) | $(1,831) | | Net Loss | $(35,853) | $(29,855) | $(5,998) | - Collaboration revenue decreased primarily due to the amendment of the BeiGene collaboration and the transfer of development obligations to BeiGene. The remaining **$19.8 million** of deferred revenue is expected to be earned upon transfer of know-how and materials[601](index=601&type=chunk) - The decrease in R&D expenses was mainly driven by a **$6.8 million** reduction in external costs as manufacturing activities and Phase 1 trials for BA3011 and BA3021 were nearing completion in late 2019[604](index=604&type=chunk) - The increase in G&A expenses was primarily due to a **$2.3 million** increase in stock-based compensation related to the IPO and a **$0.8 million** increase in personnel expenses[605](index=605&type=chunk) [Liquidity and Capital Resources](index=128&type=section&id=Liquidity%20and%20capital%20resources) BioAtla's cash and cash equivalents surged to **$238.6 million** by December 31, 2020, primarily from **$271.8 million** in financing activities, including IPO and Series D proceeds, expected to fund operations through 2022 - As of December 31, 2020, the company had cash and cash equivalents of **$238.6 million**[612](index=612&type=chunk) Cash Flow Summary (Years Ended Dec 31) | Cash Flow Activity | 2020 (in thousands) | 2019 (in thousands) | | :--- | :--- | :--- | | Operating Activities | $(36,334) | $(9,645) | | Investing Activities | $(590) | $(1,509) | | Financing Activities | $271,825 | $3,995 | - Net cash from financing activities in 2020 included **$200.2 million** from the IPO and **$68.2 million** from the Series D convertible preferred stock issuance[626](index=626&type=chunk)[627](index=627&type=chunk) - The company believes its current cash and cash equivalents are sufficient to fund ongoing operations at least through the end of **2022**[618](index=618&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=135&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable as the company qualifies as a smaller reporting company - The company states that this item is not applicable as it is a smaller reporting company[649](index=649&type=chunk) [Financial Statements and Supplementary Data](index=136&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements show **$238.6 million** cash and **$210.0 million** equity as of December 31, 2020, with a **$35.9 million** net loss for 2020, reflecting IPO, Series D financing, and corporate reorganization Consolidated Balance Sheet Highlights (as of Dec 31, 2020) | Metric | Amount (in thousands) | | :--- | :--- | | Cash and cash equivalents | $238,605 | | Total Assets | $244,937 | | Total Liabilities | $34,963 | | Total Stockholders' Equity | $209,974 | Consolidated Statement of Operations Highlights (Year ended Dec 31, 2020) | Metric | Amount (in thousands) | | :--- | :--- | | Collaboration Revenue | $429 | | Total Operating Expenses | $30,528 | | Net Loss | $(35,853) | - In July 2020, the company completed a corporate reorganization, converting from an LLC to a Delaware corporation, spinning off Himalaya Therapeutics SEZC, and completing a Series D financing[676](index=676&type=chunk) - In December 2020, the company completed its IPO, selling **12,075,000 shares** of common stock for net proceeds of **$198.3 million**. All outstanding convertible preferred stock was converted into common and Class B common stock[768](index=768&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=174&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None reported[866](index=866&type=chunk) [Controls and Procedures](index=174&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of December 31, 2020; a management report on internal control over financial reporting is not yet required for this newly public company - Management concluded that as of **December 31, 2020**, the company's disclosure controls and procedures were effective at the reasonable assurance level[867](index=867&type=chunk) - A management report on internal control over financial reporting is not included, as permitted for newly public companies[868](index=868&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended **December 31, 2020**[869](index=869&type=chunk) [Other Information](index=174&type=section&id=Item%209B.%20Other%20Information) Co-founder Carolyn Anderson Short will depart effective May 31, 2021, receiving severance benefits including **18 months** of base salary and accelerated equity vesting - On **March 18, 2021**, co-founder and Chief of Intellectual Property & Strategy, Carolyn Anderson Short, agreed to depart the company effective **May 31, 2021**[870](index=870&type=chunk) - Ms. Short's transition agreement includes severance benefits such as a lump sum payment equal to **18 months** of base salary and accelerated full vesting of her time-vesting equity awards[871](index=871&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=175&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[872](index=872&type=chunk) [Executive Compensation](index=175&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=175&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information for beneficial owners and management is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=175&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) [Principal Accountant Fees and Services](index=175&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the company's 2021 Annual Meeting Proxy Statement - Information required by this item is incorporated by reference from the company's upcoming Proxy Statement[874](index=874&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=176&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements and an index of exhibits filed with the Annual Report, noting the omission of inapplicable financial statement schedules - This item lists the financial statements and an index of all exhibits filed with the Form 10-K[875](index=875&type=chunk)[876](index=876&type=chunk) [Form 10-K Summary](index=176&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports that no Form 10-K summary is provided - None[877](index=877&type=chunk)